Stock Market News For Jan 6, 2020
Zacks Investment Research | Jan 05, 2020 10:04PM ET
U.S. stocks were hit hard on Friday, declining from a record high after a U.S. military airstrike in Iran gave birth to fresh tensions in the Middle East. The airstrike, authorized by President Donald Trump, killed Iranian military commander Qassem Soleimani early on Jan 3 in Baghdad. This led oil prices to shoot up close to 4% on Friday. Also, a more-than-expected contraction in the U.S. manufacturing sector induced fears of an economic slowdown.
The three major indexes— the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite — closed in the red on Friday. Dow hit 28,634.88 after losing 0.8%, the broader S&P 500 finished at 3,234.85 after declining 0.7% and the Nasdaq Composite closed at 9,020.77 after decreasing 0.8%.
The fear-gauge CBOE Volatility Index (VIX) rose 12.4% to close at 14.02 on Jan 3. Finally, decliners outnumbered advancers on the NYSE by a 1.17-to-1 ratio.
Iranian Commander Killed in U.S. Drone Strike
The death of Qassem Soleimani, chief of Iranian military operations in Syria and Iraq, marked a turning point in the United States’ relationship with Iran. U.S.-Iran relation had been rather rocky for the past year, given tensions over a 2015 nuclear deal, United States’ economic sanctions on the country and Iran shooting down a U.S. drone over the Strait of Hormuz in June 2019.
But now, Soleimani’s assassination has led to more fallout in U.S.-Iran relationship. Iran’s Supreme Leader Ayatollah Ali Khamenei declared three days of mourning on Friday. A day after, Trump threatened to hit 52 Iranian sites “very hard” if Iran attacked U.S. citizens or U.S. assets.
Soleimani’s body was returned to Iran on Jan 5. The very same day, Tehran said that the country would no longer abide by its 2015 nuclear agreement with world powers. President Trump had pulled the United States out of the pact in 2018. The nuclear deal limited Iran’s uranium enrichment, the amount of enriched uranium the country could stockpile, along with nuclear research and development.
Oil Prices Jumped on Brewing Middle East Tension
International benchmark Brent crude gained 3.6% to trade at $68.67 on Jan 3, following news of the Iranian military chief’s death. Oil price initially shot up as high as $69.50, but then decreased to settle at $68.67 a barrel.
U.S. West Texas Intermediate also gained 3% to settle at $63.05 per barrel after trading at $64.09 earlier in the session. WTI’s $64.09 was its highest price per barrel since April. Shares of W&T Offshore, Inc. (NYSE:WTI) , which is an independent oil and natural gas producer, rose 7% on Friday post the oil price spike. The company carries a Zacks Rank #2 (Buy). You can see Zacks Investment Research
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